EXHIBIT 10.4
EXECUTION COPY
STANDSTILL AGREEMENT NO. 3
Dated as of September 12, 2002
STANDSTILL AGREEMENT NO. 3 (this "AGREEMENT") in respect of the Amended
and Restated Credit Agreement, dated as of September 24, 2001 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among Genuity Inc. (the "BORROWER"), the lenders and agents
party thereto, and JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), as Administrative Agent (the "Agent"). Capitalized terms not otherwise
defined herein shall have the same meanings as specified therefor in the Credit
Agreement.
PRELIMINARY STATEMENTS
(1) Certain Events of Default have occurred and are continuing under
(a) Section 6.01(g) of the Credit Agreement as a result of the conversion by
Verizon of all but one of its Class B common shares of the Borrower into Class A
Shares (such Events of Default, the "CONVERSION DEFAULTS") and (b) Section
6.01(c) of the Credit Agreement attributable to events relating to insolvency or
similar proceedings of (including, without limitation, the financial condition,
payment of taxes by, or solvency of) Integra S.A., a 93% owned subsidiary of the
Borrower organized under the laws of France (such Events of Default, the
"INTEGRA DEFAULTS", and collectively with the Conversion Defaults, the "EXISTING
DEFAULTS").
(2) The Borrower has requested that the Lenders agree not to exercise
any of their rights and remedies under the Credit Agreement based upon the
occurrence and continuance of the Existing Defaults or in respect of the
Revolving Credit Advance in the amount of $722,500,000 made by certain Lenders
to the Borrower on July 22, 2002, which amount has been reduced to $572,500,000
(the "ADVANCE") as a condition to the effectiveness of the Standstill Agreement
dated as of July 29, 2002, and the Standstill Agreement No. 2 dated as of August
13, 2002, in each case during the Standstill Period (and the Second Standstill
Period, if applicable).
(3) The Required Lenders have indicated their willingness to agree to
forbear from exercising any rights and remedies under the Credit Agreement based
on the occurrence and continuance of the Existing Defaults or that would
otherwise be immediately available to the Lenders, in consideration of the
agreements of the Borrower and the Guarantors set forth in this Agreement and on
the terms and subject to the satisfaction of the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
SECTION 1. STANDSTILL; FUNDS TRANSFER PROCESSING. During the period
(the "STANDSTILL PERIOD") commencing upon the occurrence of the Effective Date
(as defined below) and ending on the earlier to occur of (a) 5:00 pm (New York
time) on October 11, 2002 and (b) the rescission of the standstill described in
this Section 1 pursuant to Section 3 (such earlier date being the "TERMINATION
DATE"), each Lender and the Agent agrees (i) with respect to the Existing
Defaults that it will not exercise any of its rights or remedies under or with
respect to the Credit Agreement or any Note, including, without limitation, any
right to declare the Notes, all interest thereon and all other amounts payable
under the Credit Agreement to be forthwith due and payable, any Guaranty or any
other agreement, document or instrument executed and delivered in connection
with the Credit Agreement or a Guaranty (collectively
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with the Credit Agreement, the Notes and the Guaranty, the "CREDIT DOCUMENTS")
and (ii) that it will not commence or file any suit, proceeding or litigation in
any court, governmental agency or arbitrator against the Borrower or any of its
Subsidiaries in any way relating to the Credit Documents or the Advance. On the
Termination Date (and on the Second Termination Date, if applicable) without any
further action by the Agent or any Lender, all of the terms and provisions set
forth in the Credit Agreement with respect to the Existing Defaults shall have
the same force and effect as if this Agreement had not been entered into by the
parties hereto, and the Agent and each of the Lenders shall have all of the
rights and remedies afforded to them under the Credit Agreement and applicable
law with respect to the Existing Defaults as though no standstill had been
granted by them hereunder. Nothing in this Section 1 (or in Section 5, as
applicable) shall affect the rights and remedies of the Agent and the Lenders
under or in connection with the Credit Agreement with respect to any Event of
Default, other than the Existing Defaults, or any other event or occurrence.
Further, the Lenders and the Agent undertake hereby, at all times during the
Standstill Period, (and during the Second Standstill Period, if applicable) to
process all transfers of funds to or for the benefit of the Borrower or any of
its Subsidiaries during the course of each Business Day in a time frame
consistent with commercially reasonable, normal banking practices applicable to
funds transfers generally (it being understood that neither the Agent nor any
Lender shall be required to incur any material increased risk in excess of
levels existing on or prior to July 22, 2002, in connection with this
undertaking).
SECTION 2. AGREEMENTS BY BORROWER. During the Standstill Period, the
Borrower agrees that:
(a) it shall not permit the aggregate amount of cash expended or paid
in excess of cash received, in each case in an aggregate amount by the Borrower
and its Subsidiaries, on a consolidated basis during the Standstill Period, to
exceed $64,500,000; PROVIDED that notwithstanding the forgoing, the payments
previously disclosed to the Agent and the Lenders in writing may also be made
during the Standstill Period (which payments the Borrower represents and
warrants will be made in the ordinary course of business and in a manner that is
no sooner than is consistent with past practice);
(b) subject to Section 2(d) and 4(a) hereof, it shall, at all times
during the Standstill Period, with respect to the proceeds of the Advance, (i)
maintain all such proceeds in the deposit or security accounts in which such
proceeds are currently deposited and (ii) not use or expend the amounts in such
accounts for any purpose (it being understood that such amounts are and may
continue to be invested in short-term money market funds during such period);
(c) amounts repaid pursuant to Section 2(d) and 4(a) hereof may not be
reborrowed; and
(d) if, at any time during the Standstill Period, Deutsche Bank AG New
York Branch ("DEUTSCHE BANK") makes available for the account of the Borrower,
in readily available funds at such account as may be designated by the Borrower,
an amount equal to $127,500,000 (the "DEUTSCHE BANK FUNDING"; such amount
representing Deutsche Bank's ratable share of the $850,000,000 Revolving Credit
Advance requested by the Borrower to be made on July 22, 2002, and constituting
for all purposes hereunder when made a portion of the Advance), the Borrower
shall by no later than the next Business Day thereafter repay to the Agent, for
the benefit of Deutsche Bank, an aggregate principal amount of $30,882,352; such
amount being a voluntary repayment of an equivalent portion of the Deutsche Bank
Funding (it being understood that the Deutsche Bank Funding may alternatively be
made by Deutsche Bank net of $30,882,352).
SECTION 3. RESCISSION. The standstill provisions of Section 1 and the
waiver in Section 6 may upon notice to the Borrower be rescinded by the Required
Lenders or by the Agent (acting with the consent or at the direction of the
Required Lenders) on, and effective as of 9:00 am (New York time) on:
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(a) the date on which any Event of Default (other than an Existing
Default) occurs;
(b) the date on which the Borrower has not complied with any of the
requirements set forth in Section 2 hereof;
(c) the date on which (i) the Borrower or any of its Subsidiaries pays
any sum in excess of $100,000,000 pursuant to any judgment or order for the
payment of money which has been rendered against the Borrower or such Subsidiary
or (ii) any lien or attachment (other than in favor of the Agent or any Lender)
on any material portion of any material assets or property of the Borrower or
any of its Material Subsidiaries has occurred pursuant to any foreclosure
proceeding or otherwise;
(d) the date on which Verizon or any of its Subsidiaries or affiliates
(i) commences or files any suit, proceeding or litigation in any court,
governmental agency or arbitrator against or affecting the Borrower in any way
relating to the lending arrangements between Verizon and the Borrower, (ii)
receives any payment from or on behalf of the Borrower pursuant to Verizon's
credit facility with the Borrower, or exercises any rights or remedies under or
in respect of such credit facility or (iii) breaches any obligation of a
material nature under, or terminates, any material contract or agreement with
the Borrower;
(e) the date on which the Borrower or any of its Subsidiaries commences
or files any suit, proceeding or litigation in any court, governmental agency or
arbitrator against any of the undersigned Lenders or their affiliates under or
in connection with the Credit Agreement (excluding, for the avoidance of doubt,
any such action against Deutsche Bank);
(f) the date on which the Borrower declares or pays any dividends, or
purchases, redeems, retires, defeases or otherwise acquires for value any of its
equity interests now or hereafter outstanding, or returns any capital to its
stockholders, or makes any distribution of assets, equity interests, obligations
or securities to its stockholders; in any case under this clause (f) in an
aggregate amount in excess of $10,000; or
(g) the date on which the Borrower prepays, redeems, purchases,
defeases or otherwise satisfies prior to the scheduled maturity thereof in any
manner, or makes any payment in violation of any subordination terms of, any
Debt, or permits any of its Subsidiaries to do any of the foregoing, other than
(i) the prepayment of the Advances in accordance with the terms of this
Agreement, (ii) the prepayment of any Debt payable to the Borrower and (iii) the
payment of cash-on-delivery charges to trade creditors in the ordinary course of
business.
SECTION 4. CONDITIONS OF EFFECTIVENESS OF THIS AGREEMENT. This
Agreement shall become effective as of the first date (the "EFFECTIVE DATE")
that (i) the Agent and the Borrower shall have received counterparts of this
Agreement executed by the Borrower, each Guarantor, the Agent and the Required
Lenders and (ii) each of the following conditions precedent shall have been
satisfied:
(a) The Borrower shall have paid to the Agent, for the benefit of each
of the Lenders listed in Schedule I hereto, an aggregate principal amount of
$25,000,000; such amount being a voluntary repayment of an aggregate principal
amount of $25,000,000 of the Advance.
(b) No event shall have occurred and be continuing that constitutes a
Default, other than the Existing Defaults.
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(c) Verizon shall have executed and delivered a standstill agreement,
in form and substance satisfactory to the Agent, agreeing to forbear from taking
actions of the type specified in Section 3(d) for so long as the standstill
provisions under Section 1 (and Section 5, if applicable), and the waiver in
Section 6, are in full force and effect.
(d) The Borrower shall have paid all fees and expenses of the Agent
which have been invoiced on or prior to the date hereof (including the accrued
fees and expenses and retainers of all counsel and the financial adviser to the
Agent).
SECTION 5. CONDITIONAL SECOND STANDSTILL PERIOD. (a) If at any time
during the period from the date hereof to November 12, 2002, each of the
undersigned Lenders in its sole discretion approves (such date of approval, the
"APPROVAL DATE") the form and substance of a Memorandum of Understanding between
Verizon and the Borrower (it being understood that to the extent any provisions
of such Memorandum of Understanding contemplates changes to the Credit
Agreement, such changes shall also be approved by the percentage of Lenders
required under the Credit Agreement), which Memorandum of Understanding shall
contain the final terms and conditions (including standard and customary
representations and warranties) upon which a proposed strategic realignment
transaction between Verizon and the Borrower shall be consummated (subject to
the preparation, execution and delivery of definitive documentation and the
other conditions precedent to such transaction specified in such Memorandum of
Understanding), the standstill provisions specified in Section 1 shall again be
in effect, starting on the Approval Date and ending on the earlier to occur of
(i) 5:00 pm (New York time) on November 12, 2002 and (ii) the rescission of the
standstill described in this Section 5(a) pursuant to Section 5(d) (such earlier
date, the "SECOND TERMINATION DATE", and such standstill period, the "SECOND
STANDSTILL PERIOD").
(b) On the Approval Date the Borrower shall pay to the Agent, for the
benefit of each of the Lenders listed in Schedule I hereto, an aggregate
principal amount of $25,000,000; such amount being a voluntary repayment of an
aggregate principal amount of $25,000,000 of the Advance; and the Second
Standstill Period shall commence concurrently with such payment.
(c) During the Second Standstill Period, the Borrower agrees that:
(i) it shall not permit the aggregate amount of cash expended or paid
in excess of cash received, in each case in an aggregate amount by the Borrower
and its Subsidiaries, on a consolidated basis during the Second Standstill
Period, to exceed the amount specified in the Memorandum of Understanding;
(ii) subject to clause (c)(iv) below, it shall, at all times during the
Second Standstill Period, with respect to the proceeds of the Advance, (1)
maintain all such proceeds in the deposit or security accounts in which such
proceeds are currently deposited and (2) not use or expend the amounts in such
accounts for any purpose (it being understood that such amounts are and may
continue to be invested in short-term money market funds during such period);
(iii) amounts repaid pursuant to Section 5(b) and clause (c)(iv) below
may not be reborrowed; and
(iv) if, at any time during the Second Standstill Period, Deutsche Bank
makes available for the account of the Borrower the Deutsche Bank Funding, the
Borrower shall by no later than the next Business Day thereafter repay to the
Agent, for the benefit of Deutsche Bank, an aggregate principal amount of
$35,294,117; such amount being a voluntary repayment of an equivalent portion of
the Deutsche Bank Funding (it being understood that the Deutsche Bank Funding
may alternatively be made by Deutsche Bank net of $35,294,117).
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(d) The standstill provisions of Section 5(a) and the waiver in Section
6 may upon notice to the Borrower be rescinded by the Required Lenders or by the
Agent (acting with the consent or at the direction of the Required Lenders) on
and effective as of 9:00 am (New York time) on:
(i) the date on which any Event of Default (other than an Existing
Default) occurs;
(ii) the date on which the Borrower has not complied with any of the
requirements set forth in Section 5(c) hereof; or
(iii) the date on which any of the events in Section 3(c), 3(d), 3(e),
3(f) or 3(g) occurs.
SECTION 6. WAIVER. During the Standstill Period (and during the Second
Standstill Period, if applicable), the Required Lenders agree to waive, solely
with respect to the Integra Defaults, the applicable requirements of Article V
of the Credit Agreement. On and after the Termination Date (and on and after the
Second Termination Date, if applicable), without any further action by the Agent
or any Lender, all of the terms and provisions set forth in the Credit Agreement
with respect to Integra Defaults thereunder that are waived hereunder shall have
the same force and effect as if this Agreement had not been entered into by the
parties hereto, and the Agent and the Lenders shall have all of the rights and
remedies afforded to them under the Credit Documents with respect to any such
Defaults as though no waiver had been granted by them hereunder.
SECTION 7. RESERVATION OF RIGHTS. On and after the Termination Date
(and on and after the Second Termination Date, if applicable), the Agent and
each of the Lenders reserve the right to exercise any and all available rights
and remedies under the Credit Documents, applicable law and general principles
of equity at any time and from time to time arising from or in any way related
to the Advance, the Existing Defaults, any other Default or Event of Default
which has occurred under or in respect of the Credit Documents or any other
document or agreement to which the Agent or any Lender is a party, or any other
event or occurrence.
SECTION 8. ACKNOWLEDGMENT. (a) The Lenders acknowledge that (i)
Deutsche Bank shall not be entitled to receive any portion of the proceeds paid
by the Borrower to the Agent for the benefit of the Lenders specified on
Schedule I hereto pursuant to Section 4(a) or 5(b) hereof, and (ii) none of the
Lenders specified on Schedule I hereto shall be entitled to receive any portion
of the proceeds paid by the Borrower to the Agent for the benefit of Deutsche
Bank pursuant to Section 2(d) or 5(c)(iv) hereof, as applicable.
(b) Each of the Borrower and the Guarantors acknowledges that (i)
certain Events of Default (A) have occurred and are continuing under Section
6.01(g) of the Credit Agreement as a result of the Conversion Defaults and (B)
are expected to occur and be continuing during the Standstill Period (and the
Second Standstill Period, if applicable) under Section 6.01(c) of the Credit
Agreement as a result of the Integra Defaults and (ii) an aggregate principal
amount of $572,500,000 in respect of the Revolving Credit Advance made by the
Lenders on Schedule I hereto on July 22, 2002 is outstanding on the date hereof
under the Credit Agreement (prior to giving effect to the payments made pursuant
to Section 4(a) hereof).
SECTION 9. NO COMMITMENT. Neither this Agreement nor any action or
inaction on the part of the Agent or any of the Lenders shall be construed to
constitute or represent a commitment by the Agent or any Lender to restructure
or refinance the Credit Agreement or any other Debt of the Borrower.
SECTION 10. EFFECT ON THE CREDIT AGREEMENT; NOTICE. The Borrower and
each Guarantor acknowledges and agrees that the Credit Agreement, the Notes,
each Guaranty and all other Credit Documents, except to the extent of the
modifications specifically provided above, (i) are and shall continue
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to be in full force and effect and (ii) are hereby in all respects ratified and
confirmed. The Borrower agrees to give prompt notice to the Agent (which will
give prompt notice thereof to all Lenders) of the occurrence of any event
specified in Section 3 or Section 5(d).
SECTION 11. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by any party hereto therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower, the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 12. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 14. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION; ETC. Each
of the Borrower, the Agent and the Lenders (i) irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement hereof and (ii) agree that Section 8.10 of the Credit
Agreement shall apply to this Agreement to the same extent as specified therein.
SECTION 15. AMENDMENT AND RESTATEMENT. This Agreement amends and
restates in its entirety the Standstill Agreement No. 2 dated as of August 13,
2002 among the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
GENUITY INC., as Borrower
By /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GENUITY SOLUTIONS INC., as Guarantor
By /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
GENUITY TELECOM INC., as Guarantor
By /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
AGREED AND ACCEPTED
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank (formerly known as The
Chase Manhattan Bank), as Administrative Agent
and as Lender
By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
THE BANK OF NEW YORK
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By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
BNP PARIBAS
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By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
CITICORP USA INC.
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By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Managing Director
CREDIT SUISSE FIRST BOSTON
------------------------------------------
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
MIZUHO CORPORATE BANK, LTD.
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By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
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By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
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By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
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SCHEDULE I
REPAYMENT AMOUNTS
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LENDER REPAYMENT AMOUNT
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JPMorgan Chase Bank $7,352,941.17
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Citicorp USA Inc. $4,411,764.70
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Credit Suisse First Boston $4,411,764.70
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BNP Paribas $2,941,176.47
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The Bank of New York $1,470,588.24
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Mizuho Corporate Bank $1,470,588.24
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇▇) Inc. $1,470,588.24
------------------------------- ----------------------
Wachovia Bank, N.A. $1,470,588.24
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TOTAL $25,000,000.00
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